News from the Federal Trade Commission - June 2012

The Facts of (Your) Life

Spokeo,
Inc., a data broker that compiles and sells detailed information profiles on
millions of people, will pay $800,000 to settle FTC
charges that it marketed the profiles to human resources
professionals, job recruiters, and others as an employment screening tool
without taking the appropriate steps. Those steps, required under the Fair
Credit Reporting Act, include ensuring the information is accurate, and telling
clients they must let people know when they use the profile information from
Spokeo to make negative decisions about them. Profiles can include a person’s
name, address, age range, and email address, and even their hobbies, ethnicity,
religion, participation on social networking sites, and photos. The FTC also
alleged that the company posted endorsements of their service that actually
were created by Spokeo employees.

Up to Old Tricks

U.S. district court has temporarily
shut down
a Florida-based operation for allegedly continuing to pitch bogus credit-repair
services across the country, despite a 2010 court order to stop. The FTC is
seeking a contempt ruling against the company. According to the FTC’s 2008 complaint, Latrese and Kevin Hargrave
and the firms they control allegedly advertised online and on radio stations that
they could erase people’s bad credit for just $250 a pop. At least part of the
payment was required up-front. But after
the customers paid, the defendants did little, if anything, to fulfill the
promises they made, the FTC says. For more on how to improve your
creditworthiness, readCredit Repair: How to Help Yourself.

A Mortgage Mess

An operation that allegedly convinced
people in danger of losing their homes to pay $1,995 for supposed
help renegotiating their mortgages has been stopped at the request of the FTC. According to the
FTC’s complaint, the defendants offered to review people’s mortgage loan
documents to see whether lenders complied with state and federal laws, falsely
claiming that homeowners could use the resulting “forensic audits” to avoid
foreclosure and negotiate more favorable terms on their mortgages. But many
homeowners didn’t receive modifications or reduced payments, and found out that
the defendants never contacted their lenders or didn’t follow up. The
defendants also failed to provide requested refunds, the FTC says, and people
often learned too late that their houses were being foreclosed upon. Read Forensic
Mortgage Loan Audit Scams for more.

Peering Into Private Info

The FTC has charged two businesses — a Utah debt
collector and a Georgia auto dealer — with illegally exposing the sensitive
personal information of thousands of people by allowing peer-to-peer
file-sharing software to be installed on their corporate computer
systems. P2P file-sharing software can be used to share music, video, and
documents, but files shared to a P2P network are available to any computer on
the network. The FTC alleged that EPN, Inc., a debt collector, failed to use
reasonable security measures, making Social Security numbers, health insurance
numbers, and medical diagnosis codes of hospital patients available to every
computer connected to the P2P network. Similarly, the FTC charged that by allowing
P2P software to be installed on its network, Franklin's Budget Car Sales, Inc.,
exposed the sensitive financial information of nearly 100,000 people.

Debt Daydream

A debt
relief operation has settled FTC charges that it allegedly deceived
people with claims it could reduce their debt by 40 to 60 percent. According to
the FTC’s complaint, Timothy Daniels and FDN Solutions, LLC — also
doing business as Everest Debt Solutions, 1800debtsettlement.com, and
everestdebtrelief.com — used paid search results on Google and Google ads on
third-party websites to advertise their services. But the company’s claims didn’t
take into account the people who dropped out of the program, or the fact that
the fees each client paid totaled 30 percent of the savings achieved, the FTC
says. The company also allegedly used a fake testimonial. For more
information on dealing with debt, see Debt Relief
Services.

"Privacy policies have to get better, they have
to get simpler… So people can really understand them."

— Jon
Leibowitz, FTC Chairman,
at the recent D10 conference

Say Halo to a Refund

The FTC has sent more than 27,000 checks averaging $25
each to people who bought the Oreck Halo vacuum or the Oreck ProShield Plus air
cleaner. The checks result from a settlement Oreck reached with the FTC for
allegedly making false and unproven claims that its products could reduce the
risk of flu and other illnesses, and eliminate virtually all common germs and
allergens. Learn more about the refunds at ftc.gov/refunds. For more on claims by marketers that their products can
fight diseases, read Miracle Cures.

POM Not So Wonderful

An
administrative law judge has upheld the FTC's complaint that POM Wonderful LLC deceptively advertised
that its products would treat, prevent, or reduce the risk of heart disease,
prostate cancer, and erectile dysfunction. The
ads in question appeared in national publications, including The New York
Times and Prevention magazine, and online. The order requires POM to
have competent and reliable scientific evidence for its disease and health claims

Break-ing News

Johnson
& Johnson will
sell its system for surgically treating serious wrist fractures to settle FTC charges that its acquisition of
Synthes, Inc., would reduce competition illegally. As proposed, the $21.3
billion deal would have given J&J control over 70 percent of products used
to treat distal radius wrist fractures.
According to the FTC, the proposed spin-offs will ensure that hospitals and
surgeons will not face higher prices or reduced innovation when treating
patients with the most common type of wrist fracture.